TMI Blog2011 (3) TMI 235X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer - Hence, decided in the favour of the assessee by way of remand - ST/19/2008 - 199 OF 2011 - Dated:- 8-3-2011 - M.V. RAVINDRAN, P. KARTHIKEYAN, JJ. G. Shivadass for the Appellant. M.M. Ravi Rajendran for the Respondent. ORDER P. Karthikeyan, Technical Member. This appeal filed by the assessee challenges demand of credit of Service Tax availed by it and penalty imposed vide the impugned order. Briefly, facts are, petroleum products manufactured by M/s. Mangalore Refineries Petrochemicals Ltd. (MRPL) at Mangalore are transferred to Hassan by a pipeline where they are stored in tanks belonging to the appellant M/s. Hindustan Petroleum Corporation Ltd. (HPCL). Parcels of different petroleum products received by HPCL are delivered to M/s. Bharat Petroleum Corporation Ltd. (BPCL) or Indian Oil Corporation Ltd. (IOCL) depending on the indent of these oil marketing companies on MRPL. Till the products are delivered from the warehouse, HPCL keeps them in their warehouse at Hassan. HPCL charges the oil companies for warehousing petro leum products eventually delivered to them. HPCL is registered with the department as a provider of output service falli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice for rendering output service of storage and warehousing of products of IOCL and BPCL moved through pipeline from Mangalore to Hassan. Pipeline transfer of HPCL is an activity related to its business of storage of products of IOCL and BPCL in its warehouse. 3. HPCL relies on the Apex Court judgment in the case of CIT v. Malayalam Plantations Ltd. [1964] 53 ITR 140 which had held that the expression for the purpose of business was wider in scope and would take into account not only day-to-day running of the business but also the rationalization of its administration and modernization of its machinery; measures for the preservation of the business and protection of its assets and property from expropriation, coercive process or, assertion of hostile title; payment of statutory dues/taxes imposed as a pre-condition for the commence/carrying on of the business and the various activi ties which are incidental to the carrying on of the business. The court had held that the expenditure incurred for carrying on of the business was covered by the expression for the purpose of business . It is argued that Input Service of rule 2(l) of CCR inter alia includes activities rela ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... am Ltd. v. CCE [2010] 26 STT 405 (Bang. - CESTAT) (iv) ITC Ltd. v. CCE [2009] 22 STT 282 (Bang. - CESTAT). 4. Heard both sides. 5. During hearing, the learned counsel for the appellants submit ted that every consignment of petroleum product dispatched by MRPL comprises portions meant for HPCL, BPCL and IOCL as agreed among them. He submitted that unless all the OMCs bought part of every consignment and moved the same, transport of petroleum products through the pipeline will not be feasible. As the appel lant rendered storage and warehousing service in respect of parcels of petroleum products meant for IOCL and BPCL, transpor tation and the warehousing of those goods were possible only if HPCL also transported a share of the consignment purchased by the other two oil companies. The appellant incurred freight and Service Tax towards transportation of the petroleum products through the pipeline. For the appellant to render the output service of warehousing the petroleum products belonging to the other two oil companies in its warehouse at the Hassan terminal, it was inevitable that HPCL also incurred cost of transportation on its share and Service Tax thereon. Therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the terminal at Hassan cannot receive the product." 8. We find that it is not forthcoming from the records such as the show-cause notice, Order-in-Original and the appeal filed by HPCL that the pipeline is used simultaneously by the three OMCs whenever a consignment is dispatched from MRPL: and that every consignment dispatched comprises parcels intended for each OMC and the supply is against indents by the three OMCs together. From the records, we find that the pipeline capacity between Mangalore and Hassan is 78,000 kilolitre approximately and that the OMCs share the same on equal basis. We find that if the pipeline is filled to capacity of any particular petroleum product with shares belonging to the three companies in mutually agreed proportion, consignments meant for different oil companies can possibly be exclusively transported keeping the pipeline filled to capacity before and after the transfer. The transfer of any quantity will be possible even if the shares of the three oil companies in the pipeline before and after conveying a consign ment are different. A consignment belonging to the three differ ent OMCs in any proportion as per indents placed can also be convey ..... X X X X Extracts X X X X X X X X Extracts X X X X
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